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Main players in budget execution

Main players in budget execution. Allister Moon Budget execution course, Jan 16. Perspectives on the roles in budget execution. Positive / normative Law,regulations/ practice ‘normal’budget implementation/ fiscal crisis. Legal Framework for Public Expenditure Management. Constitution.

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Main players in budget execution

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  1. Main players in budget execution Allister Moon Budget execution course, Jan 16

  2. Perspectives on the roles in budget execution • Positive / normative • Law,regulations/ practice • ‘normal’budget implementation/ fiscal crisis

  3. Legal Framework for Public Expenditure Management Constitution Fiscal Responsibility Acts Budget System Laws Local Government Laws Public Debt Laws Annual Budget Law Regulations

  4. Central agencies functions in budget execution (1) • Administering release of funds • Monitoring expenditure flows • Reporting • Cash management • Managing central payments

  5. Central agencies functions (2) • Monitoring macro/fiscal performance • Review progress in sector programs • Coordinating budget revisions as required

  6. Varying configurations of central agencies • Separate Treasury ministry • Role of Office of President/Prime Minister /State Chancellry • Ministry of Economy/Planning – monitoring macro, sector programs • Public Service ministry – wagebill

  7. Spending agencies functions • Allocating funds to spending units • Procurement ; commitment, purchase, verification • Payments/prepare request for payments • Progress reports, performance monitoring • Review program implementation • Reallocation within approved ceilings

  8. Rules of the game in budget execution • What kind of flexibility do spending agencies have : budget classification, appropriations, virement provisions • Aggregate fiscal discipline, predictability and frequency of releases • Quality of control systems: treasury function, commitment controls

  9. Other players • Central bank, banking system • Legislature • Revenue agencies • External audit

  10. Formal/informal practices • Budget deviation : a useful indicator of informal allocations through budget execution • Stable patterns of excess allocations to ‘power ministries’ • Unrealistic budgets creating discretionary powers • Evading aggregate discipline : exploiting weaknesses in commitment control

  11. Out turn as % Budget for selected MinistriesRecurrent expenditures, 1987/8-1994/95, Uganda

  12. Case study : developing the Russian Treasury • Background : esw on overall budgetary system, review of draft budget legislation, • Treasury established, but major gaps in coverage, classification system, commitment control, inadequate information systems • High budget deviation, low credibility • Strong commitment to Treasury reform, little interest in broader budget management reform Problem : establishing an appropriate role for the Treasury through defining the interface with other players

  13. Defining the role of Treasury with other players • Central bank, the banking system: transferring to the Treasury single account • Revenue agencies • Line ministries • Sub national government • Chamber of Accounts • Treasury staff

  14. Case study : Uganda cash management • Background : early 1990s macro crisis, inflation 100%, major fiscal imbalance • Facing persistent revenue instability, external shocks • High priority for stabilisation objectives, but need to maximise predictability for spending agencies • Adapting budgetary institutions to context

  15. Frequency Distribution of One Year Errors as a Percentage of GDP, 1980-2000

  16. Revenue instability Index = standard deviation of year to year changes in tax revenue and grants as percentage trend GDP

  17. Design issues in cash management • timetable : long planning horizon, short review & intervention horizon • scope of analysis : review all stabilisation instruments • institutional issues: broad inclusion, joint commitment, accountability for forecasting, close coordination with central bank • decision rules : feedback from macro outturn, protected expenditure

  18. Dimensions of a cash management system

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